Ethics and Real Estate

As a junior sales agent many years ago, I lost a listing to a competitor. The seller’s rationale surprised, telling me, “We really like you, Hayden, and the other guy makes my skin crawl, but we reckon he can get us the best price.” The idea there was a disconnect between being a good person and achieving the best market price was difficult to comprehend then as it is today. Thankfully, the two are not mutually exclusive. The Governance Institute of Australia undertakes an annual survey of Australian society’s perceptions of ethics across the major occupational sectors. Unsurprisingly, nurses, veterinarians, doctors, teachers, ambulance and fire services all rank in the top ten of ethical occupations. The bottom ten are made up of lawyers, politicians, senior executives and fund managers. Real estate agents rank third last with 46 percent of those surveyed suggesting we were ‘somewhat unethical or very unethical’.

Remarkably, the militant Construction Forestry Maritime Mining Energy Union ranked higher in ethical behaviour than real estate professional associations. Clearly, the community judge us and those that represent our interests (as President of the REIA that includes me) harshly. With such a poor ethical reputation, it is surprising that many real estate agencies survive as long-standing small businesses. It’s hard to imagine a local restaurant, retail shop or other cottage business that suffered such a poor
reputation surviving very long. As a local real estate practitioner and employer, your reputation is everything. Damage your reputation through misconduct in the market and word quickly spreads that you’re untrustworthy. Most local agents enjoy a solid reputation, attract repeat business and have serviced theircommunities for years. For example, a quick Google search of Fremantle’s top three real estate agencies boast 418 reviews at an average of 4.6 stars. And ask random folk about real estate agents and the reply is often, “they’re terrible, but mine’s great!”.

So, why the disconnect between community perception and most users of real estate services? Part of the answer lies in the history of real estate agents’ behaviour prior to their regulation in the 1970’s. Stories of real estate agents preying on “little old ladies”, underselling their homes to relatives and on-selling for profit, can develop into urban myths that remain stuck to an industry for generations. Mostly though, it is our fiduciary responsibility to work in our client’s best interest that impacts community perceptions of an agents’ ethical conduct. Being duty bound to achieve the highest possible rent and / or market price for a property in times where supply is tight and demand is high, impacts those on the buying and renting side. It follows that a buyer or tenant can feel ‘forced by the agent’ to pay more and that translates as
unethical behaviour. It is the daily, necessary work of agents that can be misconstrued as unethical when the reality is the agent is simply respecting their legal obligations.